India’s efforts in recent years to establish greater energy connectivity with Bangladesh, Bhutan, Nepal and Sri Lanka have been successful.
India, Nepal and Bangladesh have finalized the draft of the Trilateral Power Trade Agreement. It is Delhi’s efforts to create more energy connectivity with neighboring countries.
The agreement, the first of its kind, has been agreed upon by the three countries and is expected to be signed in the coming months. The agreement is said to fulfill the long-standing demand of Nepal and Bangladesh.
When Nepali Prime Minister Pushpa Kamal Dahal visited Delhi in early June, Indian Prime Minister Narendra Modi unveiled India’s plans to export hydropower from Nepal to Bangladesh. It is reported that 50 megawatts of electricity will be the initial generation, with the potential to increase thereafter.
The deal is in line with India’s efforts in recent years to establish greater energy connectivity with Bangladesh, Bhutan, Nepal and Sri Lanka through power transmission networks and petroleum pipelines.
It also has an unstated objective of reducing its neighbors’ dependence on China. In the past India has shown more interest in power trade with neighboring countries under bilateral agreements.
The final form of new guidelines for cross-border trade in electricity in recent years have served as building blocks for new arrangements.
The project guidelines, developed after consultation with all stakeholders, also allow neighboring countries to participate in these power exchanges.
It enables a country like Nepal to transmit electricity from one region to another through India. The scheme has been drafted in such a way that power from any Chinese-funded power plant in the neighboring country cannot be traded through the Indian link.
In addition to building electricity transmission infrastructure in Nepal and Bangladesh, India has also helped build cross-border pipelines with both countries.
South Asia’s first cross-border petroleum pipeline connects Motihari in Bihar to Amlekunj in Nepal. It was built at a cost of 324 crore rupees. Launched in 2019, the project has provided 2.8 million metric tonnes of diesel to Nepal.
Both sides have also approved the construction of the second phase of the pipeline. Based on this, a second pipeline connecting India to Jappa N region in Nepal is to be constructed.
In March this year, India and Bangladesh launched a Rs 377-crore cross-border petroleum pipeline project.
It is expected to supply one million metric tonnes of diesel annually from Assam’s Numaligar refinery to the northern parts of the neighboring country. The length of this pipeline is 132 km and 127 km in Bangladesh.
During the economic crisis in Sri Lanka, part of India’s support worth $4 billion was seen as a project to help meet Colombo’s fuel and gas needs.
When petrol stations in Sri Lanka went down in June last year, India supplied fuel through Indian petrol stations. Sri Lanka and India have agreed to jointly develop oil-bearing farms amid growing concerns about China’s influence in Trincomalee.
Energy cooperation between Nepal and Bangladesh is one of the most promising areas of cooperation. Plans to make power an exportable good are outlined in Nepal’s 15th Five-Year Development Plan (2019-2024). Nepal plans to grow its 1,250 MW of electricity production to more than 5,000 MW within the next five years, making it an energy-surplus country. The goal of Bangladesh is to invest, produce, and import surplus energy from Nepal. The fact that Bangladesh and India use more electricity during the summer months, which is their busiest time of year, must be emphasized.
A trilateral energy sales and purchase agreement between Bangladesh, Nepal, and India are required for any Dhaka-Kathmandu power transaction to be implemented because Bangladesh and Nepal do not have a direct land link. Both parties have acknowledged that the trilateral agreement’s strategic component is vital; otherwise, electricity exports to Bangladesh would be only on paper.
Being a land-locked country, Nepal’s plan to export its electricity other than to India requires India’s close cooperation and partnership. According to the Central Electricity Regulatory Commission (CERC) of India, the Indian authority is allowed to do cross-border trade where India is involved. There is a specific provision of a tripartite agreement that allows the Indian authority to sign the framework of bilateral agreements between the government of India and the governments of the respective neighbouring countries. In other words, Bangladesh and Nepal need to sign bilateral agreements for cross-border electricity trade with India.
If India finally allows power corridor to Bangladesh to import electricity from Nepal, it will usher a new era of bilateral energy cooperation. Not only that, through Bangladesh, it can achieve its untapped opportunities of hydropower from the northeastern region. So, both Bangladesh and India should come forward to enhance their energy security based on reciprocity and enhance South Asian regional cooperation.
If the plan materialises, it will be Nepal’s first export of power to a third country other than India. Since November 2021, Nepal has been selling its excess power to the Indian market after the southern neighbour gave regulatory clearance.
In recent years, India has been prioritising regional integration among South Asian countries, excluding Pakistan. As per the joint vision statement on power sector cooperation between Nepal and India issued in April last year, the two countries agreed to expand sub-regional cooperation in the power sector among Bangladesh, Bhutan, India and Nepal (BBIN).
India and Bangladesh are committed to collaborating on regional connectivity projects such as the BBIN Motor Vehicles Agreement and the Kolkata-Silchar-Imphal-Dhaka Bus Service, for mutual benefit.
Bangladesh has set a target of covering 40 percent of its power generation with clean energy by 2041 and to import around 9000MW under regional and sub-regional cooperation. Nepal, which is increasing its generation capacity rapidly lately, stands ready to fulfil the part of clean energy needs of Bangladesh.
By the end of the current fiscal year 2022-23 in mid-July, Nepal’s power generation capacity is expected to reach 2,853MW, 4,507 MW by mid-July 2024 and 5,251MW in mid-July 2025, according to NEA. But domestic consumption is expected to be half of the potential generation by 2025 which forces Nepal to sell electricity abroad, it said.
In July 2018, Nepali government issued a white paper targeting the growth in power generation. As per it, Nepal aimed to generate 15,000MW of power in 10 years and 5000MW will be exported.
Nepal has gross hydropower potential of 72,544 MW from three river basins: Koshi, Gandaki, and Karnali which covers 94 percent of the total gross potential of the country, according to a study carried out by Nepali government in 2019.
According to Nepal’s energy ministry, Nepal and Bangladesh also agreed to make joint efforts to create a high level trilateral administrative mechanism between Nepal, Bangladesh and India to forge partnership in the areas of power trade, building cross border transmission infrastructure and overall cooperation in the power sector.
The Joint Steering Committee meeting also instructed the Joint Technical Team (Transmission) under high level mechanism, to explore options of cross border transmission lines to enable trading of power between Nepal and India and submit a report within six months.
The Joint Technical Team had earlier identified two routes—Anarmari (Nepal)-Panchagarh (Bangladesh), and Anarmari (Nepal) to Thakurgaon (Bangladesh) for dedicated transmission lines.
The total length of the first route is 49km, of which a 24km section falls within the Indian territory. The second route has an 83km length, of which a 33km section falls in Indian territory.
Bhetuwal, who was also a delegation member of Nepal, said that two sides now would explore three options of transmission infrastructure to enable trading of power between the two countries in the short, medium and long run.
They include: using existing India-Bangladesh cross border link, enhancing the capacity of existing Baharampur-Bheramara link between India and Bangladesh and developing Duhabi (Nepal)-Purnia (India) and Barapukuria (Bangladesh) transmission link.
During the meeting, the Bangladeshi side also notified Nepal that the Bangladesh Power Development Board would soon sign power sale agreement with GMR, India to sell 500MW of electricity from 900MW Upper Karnali Hydropower Project based in Nepal, according to Nepal’s energy ministry.
The Indian company is working to generate resources to develop a Nepal-based hydropower project and securing power sale agreement would be important for the company to conclude financial closure.
In early May, the Constitutional Bench of the Supreme Court had paved the way for the Indian company to work towards financial closure of the project enabling it to sign power sale agreement with Bangladesh entity after the court vacated earlier interim order against the Indian company.
The two countries also decided that the NEA and BPDB would sign a joint venture agreement within the next six months to develop the 683 MW Sunkoshi 3 hydropower project at the border of Ramachhap and Kavrepalanchowk districts of central Nepal, according to the energy ministry of Nepal.
Earlier, the two countries agreed to develop this project jointly but entities responsible for developing the project were not determined.
